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Friday, April 1, 2011

Don't Bother Prosecuting Insiders

This story was offensive. The SEC and Injustice Department decided to not pursue criminal charges against Lehman Brothers.

A government probe into the fall of Lehman Brothers Holdings Inc has hit so many snags that enforcement officials fear they may never be able to bring civil or criminal charges against company executives, the Wall Street Journal reported on Saturday.
Lehman Brothers' CEO (Dick Fuld) and CFO should have been charged with violating Sarbanes-Oxley, for their Repo 105 fraud. The SEC and Justice Department decided "We're not 100% sure we can get a conviction. Therefore, we're not pursing criminal charges."

Who do they think they're fooling? It would be a slam-dunk to get a jury to convict. There's so much anger against the banksters, it'd be easy to find 12 people willing to vote "guilty".

Here's the State lawyer's reasoning. "If there's an acquittal, it's a professional embarrassment for me. I'm better off pursuing soft targets like Julian Heicklen, than bankers. Dick Fuld will spend $10M+ on lawyers, and may win acquittal." By that reasoning, insiders should *NEVER* be charged with a crime. They'll spend a lot on fancy lawyers and may spin an acquittal.

It's much easier to prosecute Barry Bonds and claim an easy victory. Prosecuting Lehman Brothers for their perjury would be too much work. (Accounting fraud is a type of perjury.)

It's easier to prosecute low-ranking banksters like Raj Rajaratnam, rather than going after higher-ranking banksters like Dick Fuld or Lloyd Blankfein.

Here's all a prosecutor has to say, to get a jury to vote "guilty", regarding Dick Fuld and Sarbanes Oxley.
Enron used off balance sheet partnerships to hide losses. The Sarbanes-Oxley law was passed to prevent this from occurring again. Lehman Brothers used Repo 105 transactions to hide losses. They misreported loans as sales.

While committing Repo 105 fraud, Lehman raised $50B in capital, by selling bonds and common stock. Dick Fuld and Lehman's CFO are clearly guilty of violating Sarbanes-Oxley.
That's all the prosecutor has to say, to get a conviction.

Technically, anyone can present evidence to a grand jury, not just the prosecutor. I considered going to a grand jury in Manhattan Federal court, making the above argument to a grand jury, and asking for an indictment.

It would be a meaningless indictment, if the US attorney declined to pursue it. It could be dismissed with prejudice, if the US attorney didn't follow through. However, it would be an embarrassment, if a grand jury gave an indictment and the US attorney didn't pursue it.

Does anybody feel like going to a Federal grand jury in Manhattan and asking for an indictment? That would be a neat publicity stunt. It's not worth me taking a day off work to do that.

It is embarrassing, that the DOJ and SEC aren't pursing Lehman Brothers' CEO and CFO for violating Sarbanes-Oxley. They are saying "We're not pursing it, because it might end in acquittal. Dick Fuld would spend tens of million dollars on fancy lawyers, and might get acquitted." That's disgusting.

There is no "rule of law" in the USA. There's one set of rules for insiders, and one set of rules for everyone else.

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